#CFPB to Regulate Stablecoins#

The Consumer Financial Protection Bureau (CFPB) is proposing to regulate stablecoins, a proposal that would have significant implications for stablecoin issuers and wallet providers. The proposal would establish a framework for applying the Electronic Fund Transfer Act to virtual wallets and stablecoins. The proposal argues that the term “funds” as used in existing law should include stablecoins, as well as other similar fungible assets that can be used as a medium of exchange and to pay for goods or services. The proposal also states that the law’s coverage of financial “accounts” should include “virtual currency wallets that can be used to purchase goods and services or make person-to-person transfers.” Institutions that provide such accounts would be subject to regulatory requirements, including consumer disclosures, protections against unauthorized transactions, and the ability to reverse improper transfers. The proposal is currently in a public comment period, and its finalization and implementation will likely not occur until after a Trump-appointed leader takes office. Even if it becomes a final rule, the Republican-led Congress has the opportunity to wipe it out using its Congressional Review Act power. The proposal has sparked controversy among cryptocurrency industry players, with some arguing that it is too aggressive and could stifle innovation, while others believe it is necessary to protect consumer interests.